Growing Up: Renewables in the Southeast

Renewable energy has a vital role to play in the Southeast’s energy sector as a means to satisfy high per-capita electricity consumption, provide an alternative to imported coal, meet the demands of a growing population, and revitalize aging energy infrastructure. However, Southeastern states have often been reluctant to create market signals attractive to renewable energy developers and investors – including appropriate incentives and government initiatives – despite having suitable renewable energy resources.

Excluding Texas, the nation’s largest producer of wind power, the Southeast only attracted about 10% of the national asset finance, venture capital, and private equity raised for renewable energy in 2012 (and only about 5% in the first nine months of 2013). However, a few states have managed to break from this pattern, like North Carolina, Georgia, Oklahoma, Texas, and others, and are experiencing growth in the solar, wind, biofuels, and biomass sectors.

In total, renewable energy accounted for about 6% of the Southeast’s total electricity generation in 2012, compared to 12% nationally. Only two states in the Southeast contributed more than 10% of their power supply from renewable energy sources. More than half of the Southeast’s total renewable power capacity was concentrated in three states: Texas, Alabama, and Oklahoma. Excluding hydropower, Oklahoma and Texas together accounted for nearly 70% of renewable electricity capacity in the Southeast region, leaving Florida and North Carolina far behind as the next largest contributors.

Just three states of the 14 profiled in ACORE’s Southeastern Region Report (North Carolina, Texas, and West Virginia) have binding renewable portfolio standards (RPSs); roughly half the states in the U.S. without RPS policies are in the Southeast. Two states, Virginia and Oklahoma, have renewable energy goals that are not binding. Three states, Alabama, Mississippi, and Tennessee, have no RPS, net metering policy, or interconnection standards (the only three such states in the nation), and their renewable energy markets are generally less developed than other states. In contrast, Texas surpassed its target of installing 10 GW of renewable energy capacity by 2025, a full 16 years ahead of schedule.

Biomass is a dominant source of renewable power in the Southeast, with capacity present in every state profiled. However, much of this capacity was built more than a decade ago, and new plants are generally built infrequently. Nevertheless, robust availability of residual wood and the presence of a well-developed harvesting and logistical infrastructure have led the Southeast to become an emerging hub for the production of woody biomass feedstocks used internationally for power and heat. Wood pellet export volumes are expected to grow substantially over the next few years as pellet plants are built or expanded to sell into the demand-rich European renewable energy market. Additionally, the Southeast increasingly uses wood chips in biomass power plants to meet state renewable energy targets. Bioenergy facilities across the region also use agricultural residues, animal waste, municipal solid waste, and other biomass feedstocks, which are often locally produced.

While ten of the 14 states in Southeast Region have no installed wind power capacity, two of the outliers are nationally recognized hubs for wind development: Texas and Oklahoma. To support the growth of the nation’s largest wind power market, Texas is building a $7 billion transmission system designed to facilitate the transmission of about 18.5 GW of wind power from turbines located in West Texas to the population centers farther east in the state. The first wind farms will soon come online in a few other states with no existing capacity, and coastal states are in the early stages of exploring offshore wind.

A few Southeastern states have begun building out their solar energy markets. Aided by financial incentives, states like Louisiana have developed emerging distributed generation markets, and Georgia, North Carolina, Texas, and Florida are home to larger-scale development. Georgia Power plans to have nearly 800 MW of solar power connected to the grid or under contract with developers by 2016. Additionally, North Carolina has recently become one of the largest developing solar markets in the nation, ranking second in new solar capacity in 2013.

The deployment of other renewable energy technologies continues across the region. Alabama and Tennessee are two of the top ten states for hydroelectric power production, and modernization has begun on older hydropower facilities to improve their efficiency. A number of states financially incentivize renewable fuels production, and developers continue to bring new ethanol, biodiesel, and advanced biofuel facilities online.

While the region, as a whole, lags behind national development trends, a few Southeastern states have emerged as hotspots for growth. As they attract investment and new renewable generation, their neighbors should see little reason not to follow suit.